Estate planning is important for every age. We’ve written about why this is true in earlier blog posts. But if you’re still not convinced, a troubling news report from MarketWatch may make you change your mind.
The article reports that your ability to make sound financial decisions is one of the first things to go as you age.
More than 5.4 million Americans have mild cognitive impairment, a condition characterized by mild problems with memory and thinking. Of those 71 years of age and older, 22 percent have it.
The decline in financial capacity is caused by a loss of what’s called “fluid intelligence.” This type of intelligence allows you to learn and process new information quickly. Your “crystallized intelligence,” or acquired experience and knowledge, doesn’t decrease, which fortunately offsets some of the loss of fluid intelligence.
Nonetheless, “after 60, it’s harder to make good financial decisions,” according to a Columbia University researcher quoted in the article.
Even more alarming, a recent study showed that older Americans scored low in a financial literacy test while they ranked themselves highly. Not only do older people make unwise financial decisions, they also don’t know that they’re making them. This characteristic makes them easy targets for scammers and others who would take advantage of them financially.
So what can you do to protect yourself (or your parents)? Have an estate planning attorney draft a financial power of attorney. This document allows someone you appoint—a trusted family member or friend—to handle your finances in the event that you are unable to do so.
If you want to help your aging parents, you can help them by setting up automatic bill pay and consolidating their accounts. You can also talk to them about creating a power of attorney.
For more information about creating a financial power of attorney and other estate planning documents, feel free to contact our office in Dayton, Tipp City, or Springfield.